Panama Canal work to restart on Thursday following preliminary agreement

The Panama Canal Authority (PCA) and the GUPC consortium that was hired to widen the waterway reached a preliminary agreement on Wednesday night to overcome the financial crisis that has put construction on hold since February 5.

GUPC, which is led by Spain's Sacyr, has committed to sending workers back to the job on Thursday, the PCA said.

In a short press release sketching out the basic points of the preliminary agreement, the PCA said that GUPC (comprising Sacyr, Italy's Impregilo, Belgium's Jan de Nul and Panama's Constructora Urbana) "accepted the PCA's reiterated entreaty and committed to restart construction on the third set of locks on Thursday."

“As soon as work is taken up again," the PCA will hand the consortium 36.8 million dollars (26.8 million euros) “representing work invoiced in December, so that GUPC workers can receive their pending pay and obligations with suppliers can be met."

The PCA will hand the consortium 36.8 million dollars to meet pending payments

The parties involved also gave themselves a 72-hour deadline to agree on delivery dates for the locks, late-payment calendars and other key elements of the project, the note added. "But there are still a few issues on which no common ground has been found yet."

Following months of dispute, the crisis reached its climax on January 1, when GUPC announced that it would halt all work on the 20th if the PCA refused to pay 1.6 billion dollars (1.2 billion euros) to cover unforeseen cost overruns. The Panamanian state company refused, saying the allegations were baseless.

Although January 20 came and went without a deal, the PCA and GUPC continued to negotiate with a new deadline of February 4. Again, no agreement emerged, and all work on the locks was halted. This third set of locks is the main portion of the expansion project. It began in 2007 with a budget of 5.2 billion dollars (3.8 billion euros).

Panama is expecting that the crisis will cause a six-month delay, pushing the completion date to December 2015. The widening of the Panama Canal is aimed at allowing larger ships through.

Initially controlled by the United States government, which began construction in 1904, Panama took over the canal in 1999.